Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Wednesday, April 30, 2014

The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

Legal settlements are one way to document unethical and even corrupt behavior by large health care organizations, even if they may not deter bad behavior in the future. It is time for another roundup of settlements by large pharmaceutical and device companies, presented in alphabetical order

Abbott Laboratories

This one goes back to late December, 2013. As described in the Chattanoogan (from Tennessee):

Abbott Laboratories, a global healthcare company, has agreed to pay
$5.475 million to settle alleged violations of the False Claims Act, and
other federal laws and regulations in connection with the operation of
its medical device business which manufactures, markets and supplies
carotid, biliary, and peripheral vascular products.

The US Justice Department accused Abbott of kickbacks to physicians,

As alleged in the settlement agreement, between 2005 and 2010, through
its employees and a third party continuing medical education providers,
Abbott offered physicians paid teaching and training assignments,
consulting arrangements, speaking engagements, and/or sponsorship grants
for physician conferences, for the purpose of inducing physicians to
arrange for or recommend that the hospitals with which they were
affiliated purchase or order Abbott’s carotid, biliary and peripheral
vascular products.

Note in particular that the kickbacks were disguised as payments for consulting or speaking.

As is usual in such cases, no individual seems to have paid any penalty or been subject to any punishment. Because this was a legal settlement, the company did not admit wrongdoing.

Baxter International agreed to pay $64 million to settle a class-action
lawsuit that alleged the Deerfield, Ill.-based company and some of its
competitors colluded to raise prices of plasma-based therapies.

Unlike the other cases above and below, this seemed to be a purely financial misadventure, although one that clearly increased health care costs,

Endo Health Solutions entered a
deferred-prosecution agreement and will pay $193 million to
settle whistle-blower claims that it marketed the shingles drug
Lidoderm for unapproved purposes, the U.S. said.
Endo will pay $20.8 million in forfeitures and $171.9
million in civil false claims settlements with the states and
the U.S. government, the Justice Department said today in a
statement.

This one was all about marketing for uses not approved by the US Food an Drug Administration,

Between 2002 and 2006, Endo sales managers instructed some
representatives on how to expand 'sales conversations' with
doctors beyond the treatment of shingles-related pain, the U.S.
said. Under the deferred-prosecution agreement, Endo admitted
that it intended Lidoderm to be used for uses not approved by
the U.S. Food and Drug Administration, the Justice Department
said.

Note that this case involves false claims, that is, fraud, because it is illegal to bill government programs for unapproved uses.

Again, no individual suffered any consequences, and the company offered the usual kind of statement that admitted neither responsibility nor guilt,

'We are pleased to resolve this matter and are confident
that we have robust programs in place to assist us in satisfying
our legal and regulatory agreements,' Endo Chief Executive
Officer Rajiv De Silva said in a statement.

One wonders, as usual, why a company would pay so much merely to avoid the legal expenses of a trial, unless of course the lawyers suspected the trail would not go well?

Hospira

This one was about hiding quality problems due to cost-cutting from investors, as reported by Reuters in March, 2014.

Hospira Inc has
agreed to pay $60 million to resolve a class action lawsuit
accusing the drug maker of misleading investors about quality
control problems that undermined an initiative to improve the
company's margins and operations.

The details included,

As Hospira was promising to address issues raised by the
U.S. Food and Drug Administration following inspections, the
plaintiffs said the company was 'making the problems worse by
gutting quality control efforts through cost cutting aimed at
boosting short-term profitability.'

The lawsuit said those cost-cutting moves stemmed from a
March 2009 initiative called 'Project Fuel' intended to increase
shareholder value by eliminating underperforming and duplicative
units and reducing its global workforce.

Plaintiffs contended the cuts in the budget and workforce
hurt Hospira's quality control efforts, particularly at Rocky
Mount, the company's largest facility.

An FDA inspection in January 2010 of the Rocky Mount
facility found a number of problems with the company's quality
control and drug validation processes, the lawsuit said, and the
agency issued a warning letter that April.

Note that this involved quality control problems presumably in drug or device production, possibly leading to safety risks for patients. Yet it was investors who brought the lawsuit.

Note also that this seemed to be a clear case in which cost-cutting measures meant to improve short-term corporate revenue lead to problems that could have caused such risks.

One interesting feature of this case was that company executives were named as defendant (presumably again because it was investors, not patients or law-enforcement officials who initiated the suit.)

The lawsuit ... also named executives including Chief
Executive Officer Michael Ball as defendants,...

I cannot find any information about whether these executives were personally liable for any payments, however. PfizerThis is yet another settlement involving the marketing of Neurontin, as reported by Bloomberg in April, 2014,

Pfizer Inc the world’s biggest
drugmaker, agreed to pay $190 million to end a lawsuit claiming
it violated federal antitrust laws by delaying generic versions
of its Neurontin epilepsy drug.

Pfizer agreed to settle the class-action litigation pending
in federal court in Newark, New Jersey, according to a filing
today. U.S. District Judge Faith Hochberg must approve the
accord, which would cover purchasers of Neurontin from December
2002 to August 2008.

Note that this settlement, like many others, is of matter from a long time ago. When it comes to bad behavior by big health care corporations, any form of justice is not swift.

Note also that this is only the latest chapter in the long saga of Neurontin, for whose mis-marketing Pfizer has already shelled out a lot of money (see this post to start, and here for the collection). Pfizer has an amazing record of bad behavior on view here. In fact, it has had a conviction as a Racketeering Influenced Corrupt Organization (RICO) on the basis of its previous marketing of Neurontin (look here).

This particular bad behavior involved included,

improperly listing
certain patents with the U.S. Food and Drug Administration,
engaging in illegal promotion and sales of Neurontin for
unapproved uses, filing and maintaining sham litigations with
respect to certain patents, and making misrepresentations to the
patent courts,

Note that while much of this was legalistic, illegal marketing was in there too.

Once more, I found nothing about any negative consequences for individuals who authorized, directed, or implemented questionable actions.

Summary

So it is all drearily familiar. Big health care organizations seem to repeatedly engage in deceptive marketing, providing kickbacks to health professionals, fraudulent billing, anti-competitive practices, etc, etc. These practices increase health care costs, and may risk patients' health and safety. Many of these practices are corrupt, at least according to the Transparency International definition of corruption, "abuse of entrusted power for private gain." Drug and device companies, for example, are entrusted to provide safe and effective products. Deceptive marketing, kickbacks to health professionals to encourage overuse, and cutting quality control to cut costs all seem to be examples of abuse of this entrusted power. The private gain obviously goes to any managers and executives who score bigger bonuses due to the increases in revenue that result.

Yet there are very few examples of any individuals who gained ever being subject to any negative consequences. Given that lack, and the lack of any requirement for corporate leaders to admit responsibility, much less guilt, is it any surprise that these practices go on and on. The failure of current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders. (Note that in fact, as noted above, one of the pharmaceutical companies
above actually was convicted of being a RICO, racketeering influenced
corrupt organization, yet that conviction seemed to have no real
negative consequences for the organization or any of the people
involved.)

As I have said again and again, pervasive bad behavior by large health
care organizations has got to be a major cause of our ongoing health
care dysfunction.

So, to really deter bad behavior, those who authorized, directed or
implemented bad behavior must be held accountable. As long as they are
not, expect the bad behavior to continue.

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